With the debt-ceiling vote date, May 16, rapidly approaching, Republicans are gearing up for the fight.
"I hope the Democrats are not going to play 'debt-ceiling politics" ... wait, Democrats playing debt-ceiling politics? This statement isn't from the showdown shaping up in Washington today. It actually comes from Republican Sen. Howard Baker Jr., then-majority leader, in early February 1981, in the midst of what would turn out to be the first major fight of President Ronald Reagan's young presidency: raising the debt ceiling, on which the administration exhorted "swift congressional action."
Well, now it's Republicans playing debt-ceiling politics, with representatives promising to vote against an increase in the ceiling unless it is accompanied by significant "cuts and controls in spending going forward." Much of the media coverage of this now months-long threat by the Republicans has underscored just how "serious" they are, and that Democrats will have to give in to some Republican demands to assure that the government can continue to borrow.
Under normal conditions -- well, normal for Washington -- Republicans would posture and threaten up to the zero hour depending on how far Congress decides to push it -- sometime between May 16, when we reach the debt ceiling, and July 8, when the two-month stockpile of funds runs out. But despite the fact that a vote to raise the debt ceiling presents a convenient platform from which to decry the excesses of a profligate government, Congress is very aware of just how catastrophic actually making good on the threat would be. (Though that catastrophe, however, would certainly not be a default on federal debt, a common yet ridiculous misperception, it would be like a person with a maxed-out credit card refusing to make payments because he or she can't get his or her credit limit raised.)
The pattern of posturing and then reluctant acquiescence has been the unbroken rule for the few occasions out of the 74 times that the debt limit has been raised since 1962 in which either Democrats or Republicans have chosen to use it simply as a political tool. (One exception: In 1953, Sen. Robert Byrd led a successful revolt against President Dwight Eisenhower's request for an increase, based on the correct assumption that the increase was actually unnecessary.)
Not surprisingly, Republicans have generally been the party to grandstand and cast protest votes, leaving the often-Democratic majority in Congress to pass the increase. In the 1980 election, however, the National Republican Congressional Committee had used the debt-ceiling votes to paint Democrats as wasteful big-spenders in several races in which Republican challengers defeated incumbent Democrats. When President Reagan asked Congress to raise the ceiling in February 1981, many Democrats cried hypocrisy and balked. Sen. Alan Cranston, the Democratic minority whip from California, asked the Republicans to apologize and assure Democrats that the debt ceiling would never again be used as a political pawn.
Republicans did indeed apologize: Rep. Barber B. Conable Jr., ranking Republican member of the House Ways and Means Committee, decried the practice, telling The New York Times that he had been "deeply disturbed by the hypocrisy that has frequently attended this vote in the past," while Sen. Bob Dole, Republican chair of the Finance Committee, proclaimed that voting in favor of raising the ceiling "could only be characterized as fiscally responsible." In the end, through a clever parliamentary trick by Senate Minority Leader Robert Byrd, the $50 billion increase in the debt limit was passed with only three dissenting Republican votes in the Senate and overwhelming bipartisan support in the House, the first time since World War II that a majority of Republicans had voted for an increase.
The only time in recent history that Congress has nearly followed through with a threat to veto an increase in the ceiling was in 1996, during the power struggle between President Bill Clinton and the Republican-controlled Congress. In late 1995, as government debt approached the limit, House Republicans tried to hold the increase in the debt ceiling hostage to deep cuts in government spending, passing a bill that coupled the increase with cuts in Medicare and Medicaid, which Clinton threatened to veto. Then, Republicans refused to pass a stand-alone increase. The standoff continued into November, causing Standard & Poor's to, as has happened now, threaten to downgrade the U.S.'s credit rating. The country actually hit the ceiling, forcing Treasury Secretary Robert Rubin to liquidate government bonds in the Federal Employees Retirement System's trust fund so that the government could borrow from itself to continue to fund operations.
Rubin was forced to continue juggling government assets to stay under the ceiling through the government shutdown in December and January as the GOP and President Clinton continued to play chicken until Rubin warned that he would have to sell off the national gold reserve, hold up tax refunds, or deny Social Security payments to seniors unless the debt ceiling was raised by the end of February. Congress passed two two-week extensions as the face-off continued. Republicans finally caved on March 29, when they passed a stand-alone $600 billion increase in the limit without any of the spending cuts or riders for which they had attempted to hold the debt ceiling hostage.
As President Obama considers accepting some Republican demands to pass the next debt-ceiling increase, he'd do well to learn from the examples set by both Reagan and Clinton before agreeing to any Faustian bargains. The truth is Obama already has the winning hand.